Biden says “Let the bankruptcy courts lower your mortgage principal”
I’m sitting here watching the VP debates and just heard Biden talk about how he wants the bankruptcy courts to be able to reduce your interest rate so you can afford to stay in your home. Ok, I guess I’m not totally against that, although I don’t think that should be the court’s decision. Instead, the court might mandate that the bank provide options to rework your payment schedule, interest rate or other attributes of your mortgage so you can afford it and the bank doesn’t have to deal with the foreclosure.
But what really got me, and I haven’t looked this up to find out the details of the plan, is that Biden also said he wants the bankruptcy courts to be able to lower your mortgage principle. Maybe I misunderstood the statement, but based on his words tonight, I take it that he wants the courts to be able to cut off chunks of principal off your mortgage.
Where would it go? How is this different than me, as a store owner, selling you a shirt on credit and you calling in a partial chargeback because you have other financial obligations. As a merchant, bank or any other business entity, why would I want to do business with you if I can lose money on my sale at any time, seemingly on a whim?
Maybe I’ll give him the benefit of the doubt and assume he meant that the court should be able to renegotiate your loan terms, not actually “forgive debt”. I can’t imagine any bill would go through that would allow the government to decide how much you owe on a mortgage, unless the sale price was inflated through fraud.
Can any of you clarify his statement with a link to their platform where it’s clarified? Your thoughts otherwise?